Aligning Performance Measurement Systems With Strategy: The Case of Environmental Strategy
Alignment of an organization's performance measurement system with its strategy is widely advocated as a guiding principle in management control system design. Despite its importance, it is far from clear what strategic alignment of performance measures entails, whether and how organizations achieve it. In this article we explore the alignment of performance measures focusing on firms' use of environmental performance indicators as the consequence of pursuing an environmental strategy. Based on the economic and contingency literatures on management control system design and performance measurement, we propose that the use of such performance measures is a consequence of changing the design of the performance measurement system to accommodate the strategy, and by increasing the informativeness of performance metrics. We test these propositions in a sample of financial managers in manufacturing firms in The Netherlands. We find that alignment to environmental strategy is mostly achieved through the increased quantification of environmental performance measures and via their increased sensitivity to managerial actions.
|Keywords||alignment, environmental strategy, management control, performance measurement systems, strategy|
Perego, P.M, & Hartmann, F.G.H. (2009). Aligning Performance Measurement Systems With Strategy: The Case of Environmental Strategy. Abacus: a journal of accounting, finance and business studies, 45(4), 397–428. Retrieved from http://hdl.handle.net/1765/19536